Sibos 2010 Day Two - Liquidity management is now 'flavour of the month'

27 October 2010

âCalmâ and âcomfortingâ - As Sibos headed into the second day, these two words were used by one vendor to describe the mood of 2010âs event - and was perhaps a far cry from how it felt to attend the conference during the past two years.

As the ongoing dialogue over the future of the banking industry continued into day two, the words ârecoveryâ, âriskâ and ârebuilding of trustâ continued to echo round the walls of the RAI in Amsterdam.

Executives from Fiserv re-affirmed sentiments expressed in the big issue debate from day one. John Phufler, vice-president of Financial Control Solutions at the firm, emphasised how risk and compliance solutions need to be ânimbleâ and increasingly focussed on offering a flexible solution to clients as the financial services industry corrects itself.

Suresh Sankaran, vice-president and director of strategic consulting services at Fiservâs risk and compliance department, tackled the hot topic of liquidity risk and commented that until recently there was a lack of regulation surrounding the area.

âNo one could predict the systemic crisis or how disclosure and liquidity management went from being the forgotten risks to the flavour of the month,â he explained.

Mr Sankaran added that the financial services industry now faces increasing amounts of regulation as it looks to restore confidence and rebuild following the crisis.

The era of âlight touchâ regulation is over as the banking world begins to realign priorities towards traditional business values such as client satisfaction, he explained.

In a panel debate later in the day, which discussed the challenges facing liquidity risk management, Thierry Lopez, risk management services leader at PricewaterhouseCoopers, began proceedings by stating that the financial crisis had highlighted gaps in the ability of firms to manage their liquidity and associated risk - he then asked the question which other areas does the industry need to work on to deal with the issue.

Elyse Weiner, managing director, global head of liquidity and investment of Global Transaction Services at Citi, emphasised the increasing importance of improving relationships between banks and clients.

She said that âpre-during and post-crisis saw intense focus on liquidity from our corporate clientsâ, while adding that client relationships will be âdeepenedâ in the future as pricing and relationship models change.

Ms Weiner also talked of how banks are now looking to centralise and standardise their liquidity management, which she described as âtaking a leaf out of the corporate bookâ.

Professor Lex Hoogduin, De Nederlandsche Bankâs executive director, highlighted how one of the lessons learnt from the financial crisis is how liquidity management needs to be the responsibility of the banks themselves.

During the opening of the debate, he discussed the role of central banks in the financial crisis and how they were forced to inject liquidity into the markets, a responsibility which they would not have to shoulder during more ânormal timesâ.

Professor Hoogduin also urged bankers to be aware that the financial collapse of 2008 should highlight the importance of a solid infrastructure to the banking system.

âIf you have individually sound institutions, it does not mean that the system functions well,â he concluded.

The importance of good quality data and effective management of this information was another theme to stem from the debate, a topic which was discussed the previous day and in an earlier session.

A presentation from Neil McGovern, director of marketing at Sybase, emphasised the importance of real-time analytics to examine risk. He said as the banking industry looks to consolidate in the wake of the market turmoil, the adoption of this service has moved from a ânice to haveâ to a âbest practiceâ.

He also outlined how the move from overnight analysis to real-time has numerous challenges, including data aggregation, the need for a single data suppository, accurate data and quality tools but financial technology could be harnessed to overcome these obstacles.

The Sybase representative called for more risk-awareness among organisations - and risk analysis needs to be more comprehensive and frequent as the area becomes increasingly complex.

McGovern concluded: âBanks need to work around these challenges to move into the best practices which are required.â

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